Advanced Pattern Recognition

Dow Jones Transports – almost parabolic UPDATE to the UPDATED

04/06/2017 – Transports hit the below resistance zone and targets and have since rallied to make new highs. What’s interesting this time is the time symmetry between the peaks in 1999,2008 and now. Also, note that they seem to always want to go up and make a slight new high before further correcting.

The time component is what has me interesting and cautious on the DJ Transportation Average – for now.

As is usually the case, the transports are getting a lot of attention, now, and rightly so because they do look heavy and are a key ingredient to this incredible ride up.

I don’t know what makes up the transport index.

I don’t care what makes up the index.

I like geometry.

IN SEPTEMBER OF 2014 THE GEOMETRY SAID THAT THE TRANSPORTS WERE RUNNING OUT OF STEAM (PARDON THE PUN)

Here’s the updated chart:

Dow Jones Transports UPDATED

September 17, 2014: below you will see some of the continuing work I have done on the transports. Quite simply, an incredible move …

there are, however, some things we can learn from this from a PATTERN perspective:

my “job” as a PATTERN chartist is to do my best to find the patterns and then present them to you, my readers. (thanks for the following also) As a PATTERN chartist you are NEVER wrong. The PATTERN works or it doesn’t it … it has NOTHING to do w/ you. On long term time frames, well, the patterns are “easier” to construct. An all time low to a “former” all time high gives you AMAZING projection capabilities. In fact, it is one of our easiest PATTERNS to form – the “zig zag or AB=CD” PATTERN. Folks this formed on the Transports and got SMOKED … not even a token of resistance. Wow …

when a “zig-zag” or “AB=CD” PATTERN fails it will usually go to 1.27 or 1.618 of the PATTERN.

so, what do we have “now”

note the all time low of 13.43 was on July 05,1932 a mere 30,024 days ago.

using that low and a 1.27 AB=CD we get a target of 9149

note, the “old” all time high in 2000 to the 2009 high was a 1.8877 extension (musical note). sometimes, the PATTERNS repeat the same harmonic. NOPE not today … blew threw it.

also, you can see the blue arrow projections and the “minimum” objective of the head and shoulders BULLISH top that formed comes in around 8880

some other projections shown for the Transports

Since this move is going PARABOLIC it’s sometimes helpful to bring out the old geometry … this is simply the technique of how to draw a circle from 3 points. (full disclosure: I have NO IDEA where the GRAVITY CENTER is going to end up.) Note, when using this technique our gravity center is, basically, the zone for the past major top in the Transports.

finding the gravity center

now that we have found the gravity center we can get to work ….

note, the gravity center (blue horizontal line) is the “reason” for the major tops

note from 1994-1999 price “hugs” and rolls right up into the top. that tells us we have a nice gravity center …

note also that when we draw, from the gravity center, harmonic trend lines we find the “major reason” for support and resistance …

when projecting from a neckline, remember, the depth of the neck is how to project UP (in this case) to project a minimum target. (again, it’s minimum target, NOT the target or though it can be)

gravity center harmonics

CLIFF NOTES: this is an incredibly powerful move. Some more targets are coming into play as noted above. when the PATTERN around 7600 failed the vacuum up was to be expected.

June 12, 2014: more than likely, you saw my long term transports post a couple months ago and as this target got attacked I was truly looking for a “little” resistance. I mean, come on, it was the ALL TIME LOW to the “old” ALL TIME HIGH and we have a 1.618 extension RIGHT ON TOP OF THE LEVEL. As patterns go .. this was a doozie. However, as patterns go, it failed. Folks, it didn’t even put up a fight …

so, I hit “erase all” on the chart and, quite frankly, left it alone. the joy of patterns and charting …

I went back to it tonight and I still think we have a pattern forming so I went back and said “self, what did it do the last time we surged past an old high and into a new high? Well, guess what? It surged thru the 1.618 extension in 2007-2008 an stopped on the 1.8877 extension! TILT … 1.8877? Well, that is exactly a major seventh ration in the equal octave scale of music. So .. perhaps it did that again? Please see below …we smacked into the minor and, quite frankly, the major is still out there. However — this sure looks like a MONTHLY 3 DRIVES TO A TOP pattern.

Keep the mindset (defensive) of ‘breaking a swing low’ …until we do break a weekly or monthly swing low this puppy will still keep running but if we break 2 or more weekly swing lows … we could see this thing drop to the old highs at 5600. Stay tuned …

What a run! Hugh?

Also, please be advised that a reader corrected me on the price and time of the old time low. I did some more research and it appears the low was in the 1930’s around 30 points lower than the one in the late 1800’s. Negligible when we are up at 8000 BUT extremely important.

When you look at the Yahoo Finance Chart below – try to disregard this is the entire life cycle of the Transports – and just look at the symmetry of the 3 drives to a top pattern that is appearing.